Uganda waives taxes on electric motorcycle assemblers

From the newsletter 

Companies assembling electric motorcycles and bicycles in Uganda will be exempted from paying import duties and value-added tax (VAT) on parts and components required for their operations. The Ugandan government has also exempted local electric motorcycle assemblers from paying income tax for the first five years of operation to promote electric two-wheelers. 

• The tax waivers will make locally-assembled electric motorcycles cheaper, which will boost adoption. It will also encourage more companies to set up assembly plants in Uganda. 

• Uganda joins countries like Kenya, Rwanda, Ethiopia, Egypt and Nigeria which have rolled out incentives to boost local assembly of electric motorcycles and scooters ranging from tax breaks and subsidies to funding and R&D support. 

More details

• Ugandan State Minister for Investment Evelyn Anite stated that the incentives are designed to encourage investment in local assembly of electric motorcycles while discouraging the importation of fully built fuel-powered motorcycles.

• The electric motorcycle industry has shown great promise in the country in recent years, warranting greater support from the Ugandan government. According to official figures, the number of electric motorcycles produced in the East African country grew by 139% to 2,795 units in 2024.  

• Since local assembly of electric motorcycles began in the country in 2019, more than 4,250 motorcycles had been produced by the end of 2024. While the leading assemblers are Gogo Electric, Zembo, Spiro and Redvers, more companies like Zeno, which operates in Kenya and India, are planning to expand to the country.      

• Uganda is following in the lead of its East African peers which have been rolling out numerous incentives to support their local electric motorcycle industries. Rwanda for instance offers a comprehensive set of incentives, including zero percent tax on electric vehicles and motorcycles, waiving import tariffs, VAT, and withholding taxes on EVs, spare parts, batteries, and charging station equipment.

• Kenya has also made strides in this area. The country has introduced VAT zero-rating for EVs, including electric motorcycles and lithium-ion batteries, and exemptions from excise duties for electric motorcycles. There is also a reduced electricity tariff for EV charging.

• Beyond the region, South Africa has introduced a substantial tax incentive for manufacturers of battery electric and hydrogen-powered vehicles. This allows EV firms to claim income tax allowances of 150% of the cost of new buildings, plant, and machinery used mainly in the production of these vehicles. 

• Spiro, a leading electric motorcycle company in eight countries on the continent, will be one of the major beneficiaries. The company is building an assembly plant in Kampala with an annual capacity of 50,000 units. The plant is part of a broader plan to deploy 140,000 electric bikes by 2028 and support 3,000 battery swap stations. Zembo and Gogo Electric have also raised debt and equity in recent months to invest in assembly and charging networks. 

Our take

• With import duty, VAT, and income tax waivers, existing players like Spiro, Zembo, and Gogo Electric are likely to scale up local production, while new entrants like Zeno and others could be incentivised to set up plants, increasing competition and innovation.

• Uganda has more than three million fuel-powered motorcycles on its roads. Lower production costs will likely lead to cheaper retail prices for electric motorcycles, making them more attractive to commercial riders and boosting adoption across urban and peri-urban areas. 

• Uganda is positioning itself as an electric mobility hub in East Africa. With these incentives and growing production figures, the country could become a regional supplier of electric two-wheelers and components, especially to its fellow landlocked neighbors like Rwanda.